what does life insurance cover

What Does Life Insurance Cover: A Must-Know Before Buying

Did you know that the UK has 435 authorised life insurance companies? Unfortunately, about 60% of Britons don’t have any life insurance. Most people who haven’t taken life insurance have several misconceptions that deter them from investing in a life cover. 

Life insurance refers to a contract you have with an insurance company. As the policyholder, you’ll be making premium payments to the insurance firm, which will be payable to your beneficiaries upon your death. Life insurance is quite broad, and it would help to know more about it.  

So, what does life insurance cover? If you’re thinking of life insurance, you need to know what it entails. Please read our detailed guide to know more about what life insurance covers.

What Is Life Insurance?

Given the misconceptions surrounding life insurance, it is crucial to establish a definition of life insurance before delving into what it covers. Life insurance is a policy that helps your dependants to cope financially after your demise. It aims at providing financial assistance to your loved ones when your income is no more. 

The types of life insurance available include the term life, universal, and whole life insurance. Term life insurance provides financial coverage for a specific period such as 20 years, while universal life insurance provides a lifetime cover. Conversely, whole life insurance is a permanent cover with higher premiums than the term life policy.

What Does Life Insurance Cover? 

Life insurance covers your beneficiaries and the needs they deem crucial. It can cover short term and long-term expenses. If you’ve been asking ‘what does a life insurance policy cover?’ here is a breakdown of what it entails. 

Everyday Bills 

Running a household without a breadwinner can be hard. The daily bills are overwhelming. From health expenses to food, you’ll need money to manage these bills. 

If you’re the sole breadwinner, your spouse will have a hard time handling the costs. The emergency fund will be depleted in a short while depending on the bills at hand. It’s a short-term solution that will soon leave your loved ones feeling the pinch of your demise. 

With life insurance, you’ll be at peace knowing that your beneficiaries have a financial cushion for their daily expenses. They don’t have to grapple with grieve and daily expenses that they can’t meet. Check out the crucial reasons why you need life insurance to know why it’s a priority if you have dependents.  

Cater for End-of-Life Expenses

The cost of funerals in the UK has been increasing by 6% every year for the last 14 years. Currently, the average cost of a funeral is £4,417. Can you imagine the turmoil your loved ones will have to go through to accord you a decent send-off? 

A life insurance cover is the best way to ensure that you get an ideal send-off without stressing your family. The policy often covers any burial and funeral-related costs. You can discuss with your insurer to determine the kind of funeral you’ll want. 

Grieving is already debilitating, the last thing you want is to have your family catering for an expensive funeral. If anything, you should leave them in a way that they are comfortable enough to lead the life that they were accustomed to. Often, life insurance doesn’t involve the clause automatically; you’ll need to include the funeral-related expenses to the coverage.

Child Care 

Raising children is an expensive affair. If you’re a parent, having life insurance shouldn’t be debatable. The policy will cover for child care expenses that you’ve been taking care of such as food, education, day-care, or even home-aides.

Your family will receive a payout that will help them to continue leading a quality life. Your children don’t have to drop out of school due to financial constraints. Your growing family should have their dreams and hopes intact, even in your absence.

For parents with a special needs kid, getting life insurance is one of the best decisions you can make for your loved ones. Special needs children have unique challenges and needs, such as nursing care, which can be quite costly.  Life insurance can pay out for these needs comfortably.

Your Medical Care

If you’re asking ‘what does life insurance cover when I am still alive?’ you’re not alone. Many people don’t know that life insurance policy has direct life benefits for the policyholder. While the better part of the coverage is for your beneficiaries, you can get part of the benefits if you’re battling a terminal illness. 

Some of the questions to ask before buying life insurance should focus on understanding the benefits you stand to gain with the policy. The insurer will confirm the health-related expenses that the insurance will cover. If you need long-term medical care, your cover will cater for the costs.

Paying Debts 

Buying a house is one of the most critical investments a person can ever make. People opt for mortgages, with payment running for up to 30 years. Would your family afford to pay for the mortgage after your death? 

Your family should rest easy knowing that they won’t be left homeless if you died. Life insurance provides your loved ones with an opportunity to clear the mortgage without financial strains. The decisions they will make on where to stay, or change of lifestyle will depend on whether you have a life cover. 

Other debts, such as car loans, credit cards, student loans, and personal debts, can also be overwhelming. Your family members, like your spouse, might be left with the burden of servicing a cosigned loan once you die. A life insurance cover is one of the best ways to ensure that your loved one isn’t burdened with the loan in your absence.

The Question ‘What Does Life Insurance Cover?’ Interests Many People

It is not surprising to find people who are interested in life insurance, but they lack the information. If you’ve been asking ‘what does life insurance cover?’ there you have it. A life insurance policy covers funeral-related expenses, long-term medical care, child care, debts, and everyday bills. 

Are you in the UK and need for life insurance? Contact us today for a quote.

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